Proceedings at a London employment tribunal were due to start on Tuesday but Woodford's lawyer, Thomas Linden, told the hearing a settlement had been reached.

It is subject to ratification by the Olympus board at their next meeting on 8 June and is likely to be passed to avoid any further embarrassment to the firm.

Outside the tribunal Woodford said: "It is a positive thing for both parties. I'm not at liberty by the terms of the agreement to go into any detail."

He added: "Hopefully today is a closure. A line has been drawn and the company can move on and I can.

"It's important that the company can rebuild itself and moves forward with its new board and I move forward with my wife and children."

At the hearing, which had been delayed by 24 hours to allow for last-minute negotiations, the judge, Justice Foxwell, said: "I congratulate the parties. I can see it is in everyone's interest to see this resolved."

Linden said the board was likely to ratify the agreement, thought to be around £10m according to reports.

Woodford was demanding 10 years' salary for unfair dismissal after pointing out irregularities to the board.

He was sacked two weeks later with the board claiming he did not understand the firm's management style and cultures. He was the first non-Japanese chief executive at the company.